Pros and Cons: Monetary and Other Financial Rewards

2018
Organisational Behaviour

PROS AND CONS: MONETARY AND OTHER FINANCIAL REWARDS
Most employers are looking for finding new ways to maximise employee productivity and
efficiency. Building strong relationship with them and motivating them are two key ways in
which they can maximise the performance of their workforce. However, it is difficult for
employers to motivate their employees because motivation is intrinsic element which is
difficult to influence through external means (Graves, Sarkis and Zhu, 2013). Many theories
argue that there are various ways to motivate employees by finding what employee values
are, whereas, others argue that monetary rewards are the fundamental way to improve
employee motivation. Monetary and other financial rewards are one of the most common
ways for employer to motivate their employees’ performance because everyone needs
money and people work to afford basic necessities and fulfil their desires. Although it is the
most common way of motivating employees, however, it does not mean that it is the most
effective way to motive every employee. As per organisational behaviour theories, there are
different elements which affect the motivation level of employees which cannot always be
fulfilled by monetary rewards (Hau et al., 2013). Similarly, the key to build strong
relationship is not monetary rewards; instead, employees must feel like a part of the
organisations. This essay will critically evaluate the role of monetary rewards in building
strong relationships with employees and motivating them. Both pros and cons of financial
rewards will be discussed in the essay by analysing different organisational behaviour
theories.
The use of monetary rewards is a universal way of motivating employees and building
strong relationship with them. Well paid employees are happy employees, and they like to
work for their organisation. Similarly, employees are more likely to strive and achieve their
goals if it provides them financial benefits. It is a universal concept because most employees
work to get paid so that they are able to afford basic necessities along with their luxury
desires (Aktar, Sachu and Ali, 2012). The biggest advantage of financial rewards is that it
appeals to a larger audience globally. However, many organisational behaviour theories
provide a contradicting approach. For example, Abraham Maslow argued in his theory that
motivation of employees is based on the fact whether achieving organisational targets will
result in fulfilling their needs (Cao et al., 2013). He provided the ‘hierarchy of needs’ theory
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which provides that there are five types of employee needs. After fulfilment of one need,
the employee move to another need, and he/she can no longer be motivated by such need.
It has been found that the employees who fall into the category of physiological and safety
needs get easily motivated by satiating their financial needs, examples of which are salary
hike, incentives and bonuses. However, employees who belong to middle-level or senior-
level positions belongs to belongingness, esteem or self-actualisation needs category, and
they are motivated by non-financial rewards example of which include appreciation,
recognition and sense of achievement (Milheim, 2012). It shows that monetary rewards
might be a fundamental part of motivating employees; however, they are not suitable for
every employee.
There are various advantages of monetary rewards and one of them being its ability to
appeal to a wider audience since everyone requires money to fulfil their needs. However, as
discussed in the hierarchy of needs theory, after fulfilment of one needs, the employer
cannot rely on such need again to motivate an employee. Thus, employees who did not
choose a job for money are less likely to be motivated by financial rewards. These
employees seek intrinsic rewards while doing a job such as collaborative and supporting co-
workers, positive environment, flexible management and others (Aguinis, Joo and
Gottfredson, 2013). Therefore, for these employees, job satisfaction is a priority rather than
money. In this context, the ‘Two-factor theory’ which was developed by Frederick Herzberg
is helpful. The theory provides that ‘motivators’ factors affect satisfaction of employees,
whereas, ‘hygiene’ factors are responsible for the dissatisfaction of employees. Hygiene
factors include base salary, working conditions, relationship with co-workers, flexible
management, and others. Presence of these factors results in decreasing job dissatisfaction
among employees. Motivator factors include the growth of the employee, recognition from
top management, achievement and others. Presence of these factors increases job
satisfaction of employees (Ghazi, Shahzada and Khan, 2013). Based on this theory, it can be
seen that although monetary rewards are a fundamental part of employee motivation,
however, they are not enough for satisfying employees which is crucial for building a
relationship and motivating them.
In recent years, the competition between enterprises has increased along with the demand
of a talented workforce. Corporations pay high salary packages to talented and experienced
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